Summary:
A strong NFP report boosts USD against CAD. Investors compare the figures between the two countries, which influences the exchange rate.
The US dollar gained a solid footing against the Canadian dollar on Monday in the wake of a strong NFP report. Investors were weighing the figures against those of Canada.
Canada's economy only added 100 jobs in December but permanent employees' wages increased at the fastest pace in three years. money markets expect the Fed to cut interest rates earlier than the BOC.
The loonie, having notched a gain of over 2% in 2023, is expected to trade at stronger levels than previously thought over the year if that expectation proves to be correct, a Reuters poll found.
According to the analyst surveyed, the currency is seen to trade at 1.3400 in three months and 1.3000 in a year, versus last month’s forecast for 1.3533 and 1.3130.
Oil prices dipped in early trade on Monday on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output after both benchmark contracts climbed more than 2% in the first week of 2024.
JPMorgan forecasted 26 oil rigs to be added this year, most of them in the Permian during the first half of the year. Energy stocks saw their seventh straight week of outflows, signalling weaker oil prices and more pressures on the loonie.
The Canadian dollar has been largely range-bound since the beginning of the year. It could retest recent low of 1.3400 and then expose the 200 SMA.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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